Rural Electrification has been one of the key focus areas for the current government.The vision of “Power for All” has been shining brightly in the eyes of government and it aims to electrify all villages by May 2018.The following post will look at the current status of Rural Electrification and various initiatives taken by the government to achieve this target.

Meaning of Electrification

As per the earlier definition of Rural electrification “A village is classified as electrified if electricity is being used within its revenue area for any purpose what. so-ever..” However, the definition needs some revision and the overall purview of Electrification is currently amended definition of Electrification as follows :

Any of the public places like Schools, Panchayat Office, Health Centers, Dispensaries, Community centers etc. avail power supply on demand and

The ratings of distribution transformer and LT lines to be provided in the village would be finalized as per the anticipated number of connections decided in consultation with the Panchayat/Zila Parishad/District Administration who will also issue the necessary certificate of village electrification on completion of the works.

Thus,as per the above definition it requires only 10 % of the households in a village to be connected for it to be classified as “electrified”. This implies that even if a large number of households remain un-electrified after covering 10%, still the village will qualify to be called as “Electrified”moreover, the definition doesn’t specify the minimum number of hours of electricity supply in the villages.

Initiatives/Schemes in Rural Electrification

Prima-facie, a couple of major steps have been taken by the earlier government and the current government.Some of these are :

Establishment of REC (Rural Electrification Corporation) : REC was established in the 1969 with the objective of providing finance and promoting finance and promoting rural electrification across the country.Its main objective is to finance and promote rural electrification projects all over the country. It provides financial assistance to State Electricity Boards, State Government Departments and Rural Electric Cooperatives for rural electrification projects as are sponsored by them.

RGGVY (Rajiv Gandhi Grameen Vidyutikaran Yojana) It was launched in April 2005 for attaining the National Common Minimum Program goal of providing access to electricity to each and every household within a period of 5 years.The scheme was to officially end in 2009 ,however, due to non-attainment of the targets, certain allocation were made for the continuation in the 12th plan period (2012 -17). In terms of achieving the targets of lighting up unelectrified villages, the performance was much better in the initial years than in the last three years of the program.

DDUGY(DeenDayal Upadhyaya Gram jyoti Yojana) : In Dec’14, the government announced DDUGY with some modification to the RGGVY scheme already in progress.It aims feeder segregation and strengthening of sub-transmission and distribution infrastructure in rural areas including metering of distribution transformers/feeders/consumers part from electrification of unelectrified villages,household.
Source :DDUGJY

Current Status

As per the revised targets set by REC vis-a-vis government of India , 2,21,424 villages to be electrified out of which 95,977 have already been electrified ( Dated 20.04.2016 http://garv.gov.in/dashboard ) . Nine states (AP , Goa , Haryana, Kerala,Maharashtra,Punjab,Sikkim and Tamil Nadu) have achieved 100 % of the village electrification.Bihar is the worst performer in terms of household electrification. While 97 percent of the Bihar’s village are electrified, only 12 percent homes have electricity connections.

Targets of Balance Un-electrified Villages as on 31.03.2016

Dilemma of Electrified and “Electricity”

As mentioned earlier around 98 % of the total inhabited villages have been electrified in India till dated but only around 64 % of he households have electricity connections. Many institutions have come up with independent research reports targeting the reality checks of the rural electrification program. A recent report by CEEW states in its report namely “Access to Clean Cooking Energy and Electricity, Survey of states” that only 4-5 % of households get supply for 20 hours or more. This implies that a large part of electrification and energy access are superficial and the same needs to be cross-verified by third party agencies.

Conclusion

The benefits of energy access and security are no doubt immense as the electricity to distant villages has lead to significant improvements in the living standards of the villagers.In impoverished and undeveloped areas, even small amount of electricity have freed up large amounts of human time and effort.With the advent of rural electrification, use of kerosene oil has seen a significant dip in the recent years ,leading to and environment friendly solution.To ensure energy security in rural areas , a strategy needs to be evolved targeting :

Location specific technologies like solar,wind,mini-hydel so that target of electrification reach the granular level of society.

Technological improvement required at the micro level so that the systems are well maintained over longer duration with requisite maintenance strategies.

Last but not the least, there are still so many villages across India which have not experience the word “Electricity” and they are to be helped with utmost priority.

With the advent of rapid industrialization, India’s energy consumption has increased significantly. According to BP Statistical review of world energy 2014 (http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014-full-report.pdf) the country’s primary energy consumption increased by 70 % from about 345 mtoe(millions tons of oil equivalent) in 2004 to 595 mtoe in 2013.However the energy mix has not changed much as in present day scenario also, the major source of energy is non-conventional sources of energy.
Although there has been significant increase in the share of Renewable sources of Energy, but there is a long way to go for Indian power sector to increase the dependency on RE sources of power. Given the paucity of fossil fuel sources of power generation and their adverse impact on the environment through GHG emissions, it is domineering to formulate the policies that are more related to the sustainable development. The role of Energy efficiency has gained significance in the recent times because ample amount of research as well implementation work has been done at the Generation side of the power sector. The country’s energy conservation potential is estimated at around 23% with industrial as well agriculture sectors having the majority scope of efficiency enhancement. Taking this into account government launched the Perform, Achieve and Trade (PAT) scheme in July 2012, which is aimed at accelerating the energy efficiency in the industrial sector.

PAT-an overview (http://beeindia.in/schemes/schemes.php?id=9)
PAT is the flagship scheme of the National Mission on Enhanced Energy Efficiency (NMEEE) which was launched in 2008.This is a market based mechanism to enhance cost effectiveness of improvements in energy efficiency in energy intensive large industries and facilities, through certification on energy savings certificates (ESCerts) that could be traded. In its first cycle that extends from 1st April, 2012 to 31st march, 2015, PAT covers industrial units in 8 energy intensive sectors which account for around 60% of the India’s total primary energy consumption. The 8 sectors include Power, Fertiliser, cement, pulp and paper, textiles, chlor-alkali, iron and steel and aluminum industries which consumer high energy than the threshold levels thereby raising an alarm bells. The same units have been identified as DCs (Designated Consumers) Under the PAT scheme, these DCs (478 in number) are expected to achieve energy savings of 6.686 mtoe of which more than 80% us expected to come from the thermal plants, iron and steel and cement sectors.
•Achievement > Target = ESCerts
•Achievement < Target = Purchase ESCerts /Penalty

PAT Steps: Formulation of PAT Concept has taken place with the advent of following series of steps:
PAT Reporting Requirements: BEE being he nodal agency for the PAT program formulated the guidelines for the PAT scheme after exhaustive workshops and consultations with the industrial players. The data submitted by DCs through various forms is an integral part of establishing the targets. The DCs are also required to follow mandatory reporting requirements for the entire PAT cycle. As a first step, DCs were required to submit the action plan to the respective SDAs (State Designated Agencies) by June 2012 ,which included proposed energy savings along with estimated investments and subsequently the energy savings are replied back with filled Form 1.Meanshile a performance assessment document, Form A to need to be submitted to the SDA and BEE once in three years. After the submission of Form 1 and Form A, the DC is required to hire accredited Energy Auditor (AEA) from the list of BEE-empanelled AEAs for the verification of the forms submitted by the particular industry. A submit of verification Form B is submitted to the SDA and BEE by June 2015.After proof reading the documents by BEE, ESCerts will be recommended by Ministry of Power by August,2015.Trading of ESCerts will be done through Power Exchanges.

Bottlenecks involved: Although we are approaching the 2nd cycle of the PAT scheme, but there has been a couple of hindrances that ate ultimately blocking the path to efficient India. These are:
Diversity of DCs: The biggest implementation challenge is the diversity of DCs in terms of their energy profile, processes and technology deployed as well as their end products. This leads to cumbersome process of settings benchmarks for the various DCs.
Factoring most efficient technologies: In order to bring at par, most efficient technologies need to be accounted too for credible benchmarking.
Lack of Skilled Manpower: It has been observed that there is a dire shortage of skilled manpower in the sector which can lead to the betterment of the energy efficient sub sector in Indian context.
Lack of Energy Accounting Infrastructure: Due to lack of efficient and stable energy management infrastructure, there is a need to step up the morale of the investors in this regard too that is perhaps the first step towards the energy reduction roadmap.
BEE being the nodal agency for the PAT scheme need to very stringent on its guidelines and road map issued to various DCs. Although the scheme is still in nascent stage but if the things are not kept in line at this point of time, then it might defeat the sole purpose of designing the PAT scheme which will lead to sustainable INDIA.
References : CEA,Power Magazines,CERC, BEE and various popular print media concerning power sector.
PAT Booklet – http://beeindia.in/NMEEE/PAT%20Consultation%20Document_10Jan2011.pdf

A transparent Regulatory Framework is required for making the sector viable for its growth as well as invoking investor confidence in the sector. To meet the growing expectations of the manufacturers, investors and consumers, CERC (Central Electricity Regulatory Commission) has amended key regulations and issued orders that can lead to the betterment of the power sector. Some of the amendments done by the regulator can be summarized as follows:

•Compensatory tariffs Approved: In Feb’14 CERC allowed compensatory tariff hikes for the two major power sector players namely Tata Power’s Mundra UMPP and Adani’s 4620 MW Coal Based Power Plant located in Gujarat.
( http://www.cercind.gov.in/2013/Reports/COMREP_CGPL.pdf) In lieu of the change in regulations of Indonesian Mining (2011)http://www.indonesiamininglaw.com/tag/iup/, the two players objected of suffering high landed cost of coal and thereby leading to loss on the exchequer’s pocket. Since the tariff revision is effective from April 1, 2013, CERC has directed the concerned DISCOMs to reimburse Rs 3.29 billion to Tata Power and Rs 3.89 billion. Some of the state DISCOMs (Rajasthan,Punjab,Maharashtra) have challenged CERC’s order before the Appellate Tribunal for Electricity (APTEL).Reliance also filed the petition concerning its Tilaiya UMPP in Madhya Pradesh. Adani has been allocated Lohara Coal Block for its project which covered around 75% of the coal requirement for the project but that came under the scanner of Ministry of Environment and Forest thereby leading Adani to hunt for alternate sources for fuel. This ultimately led to escalation of its levelised tariff as defined in the PPA.

•Tariff Regulations : In feb’14 CERC came with the new Tariff regulations 2014-19,http://www.cercind.gov.in/2014/regulation/reg21.pdf which put forward many changes leading to strong repulsion from the major players in the market:
o Incentives for players have been linked to Plant Load Factor(PLF) as compared to Plant availability factor(PAF) as described in the earlier regulations.
o The base RoE(The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested) has been fixed on 15.5 % but FGMO,www.srldc.org/var/ftp/FGMO/FGM%20IN%20SR.ppt has been critically linked with it leading to tough times for Generators.
o Provision of PAT(Perform, Achieve and Trade)http://www.performachievetrade.com/ has also been included in the guidelines issues.
o Heat rate norms have been made more stringent for existing as well as new power plants. The factor has been changed to 1.045 from 1.063 (Kcal/KwH)
o The normative annual PAF has been reduced to 83 % from 85 %.
Responding to CERC Tariff Regulations, NTPC moved to courts against CERC mentioning that the PLF based incentive could hit their profitability.

•IEGC Amendment: In Jan’14, CERC issued an amendment to IEGC regulations 2010, further tightening the frequency band to 49.9 Hz – 50.05 Hz from the earlier range of 49.7 Hz -50.2 Hz.http://www.cercind.gov.in/2014/regulation/noti18.pdf In addition to sandwiching the frequency range, Grid integrations has also been pushed further with the inter-connectivity of Raichur-Sholapur transmission line. In context with the change in IEGC regulations, Penalty charges related to deviation mechanism of Unscheduled Interchange (UI) has also been revised.

•Open Access Regulations: Apart from the changes concerning LTOA (Long Tern Open Access) and MTOA (Medium Term Open Access) in Interstate Transmission Regulations, 2008 , there have been proposed amendments regarding the connectivity of renewable energy projects of 5 MW – 50 MW capacity with the interactive grid.

•Power System Development Fund,http://powermin.nic.in/whats_new/pdf/Operationalization_of_Power_System_Development_Fund_Jan2014.pdf : CERC issues PSDF regulations 2014 replacing the earlier PSDF regulations 2010 and intents to push the investments in the transmission sector. The fund will be maintained through a collection of Congestion charges, deviation settlement charges and reactive energy charges. Primarily the fund will be used for capacity building in the transmission sector including installation of shunt capacitors, series compensators, VAR compensators etc.

•PoC Tariff Regulations : In Feb’14 CERC issued a draft amendment regarding the sharing of Inter-state transmission charges and losses regulations, which incorporated the PoC methodology of determining the cost and losses to be shared by the users of the ISTS(Inter State Transmission System)

•RE Tariff regulations: In Mar’14 the first amendment to the Terms and Conditions for Tariff determination from RE sources regulations were approved by CERC,http://www.cercind.gov.in/2014/whatsnew/SO354.pdf. The amendment aimed to address various issues faced by biomass plants.

Power Trading has come a long way since trading has been recognized as a distinct entity in Electricity Act, 2003.

What is Power Trading?
Basically, Power trading is an activity of buying and selling of power at Power Exchanges, which are approved by Central Electricity Regulatory Commission (CERC)and moreover standardized Products are offered to buy and sell power. Thus Power is traded like a commodity at Power Exchanges like IEX (India Energy Exchange), PXIL(Power Exchange India Ltd.) Likewise shares trading are done on SENSEX etc & commodity trading at NCDEX etc.

What is Open Access?
Open Access allows large users of power having a connected load of 1 Megawatt (1MW) to buy cheaper power from the market.

Acc. To EA 2003 Sec 2(47) : “open access” means the non-discriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission;

Types of Open Access:
• Inter State Open Access: When buying and selling entity belong to different states.
• Intra State Open Access : When buying and selling entity belong to same state.Types of Power Trading?

Broadly Power trading can be sub classified on the basis of duration of contracts and energy trading platform.Types of Exchange

What are the statutory requirements for Power Trading?
Some of statutory requirements notified by CERC are:
• Demand should be atleast 1000KVAH
• Connected to atleast 11KV line
• Should have 0.2S class CT/PT
• Should have 0.2S class ABT meter
• Consent from DISCOMs/SLDC to trade power.

HHI stands for Herfindahl-Hirschman Index
A commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in a market, and then summing the resulting numbers. The HHI number can range from close to zero to 10,000.In case of p
For the year 2012-13, HHI was 0.1437

Some Facts about Power Trading (Ref from CERC’s MMC Report)
• In 2011-12, Weighted Average price of electricity traded through Power Exchanges Rs 3.67 / unit and through trading licensees Rs 4.33 /unit.
• During the year 2012-13, 89% of the volume of electricity in IEX and 94% of the volume of electricity in PXIL was transacted at less than 6/kWh. 70% of the volume in IEX and 73% of the volume in PXIL was transacted at less than 4/kWh
• During 2012-13, only 179 million units of electricity was exclusively bought during peak hours under bilateral transactions from traders (exclusive of banking). This was 0.79% of the total electricity bought under bilateral transaction from traders (excluding banking). A major part of this, 93.24%, was bought on round the clock (RTC) basis, followed by 5.97% exclusively bought in periods other than peak periods. The per unit price of electricity procured on round the clock (RTC) basis was the cheapest (4.29/kWh), followed by electricity exclusively procured during non-peak hours (4.66/kWh) and electricity exclusively procured during peak hours (4.97/kWh).

Some of the Key points being highlighted in SBD are:
-Bidding will be done on single parameter i.e “capacity charge” (comprises of RoE(Return on Equity,Interest on Loan Capital,Depreciation,Interest on Working Capital, Operation & Maintenance cost ,Cost of secondary fuel,special allowances in case of R & M of a thermal power plant).
-The basic building of SBD is adopting DBFOT Model(Design,Build,Finance,Operate and Transfer)which says the power plants will be transferred to contracting DISCOMs after the completion of the project life.
– Fuel charge will be a pass through component and it will be reflected in the distribution tariff as quoted.
-Incentive will be provided to the developers on improving the Station Heat Rate(The Station Heat Rate of a conventional fossil-fueled power plant is a measure of how efficiently it converts the chemical energy contained in the fuel into electrical energy,usually expressed in Kcal/KWh).
-Land acquisition will be procured by the utility as the concessionaire may face difficulty for getting the land at the aforesaid location.

Future Scenario
With the finalisation of the revised SBD for Case 1,more states will initiate the process of issuing RFPs thereby giving the clarity on SBD.Provisions related to tariff revision and acceptance of Long Term power procurement as compared to short term would also drive states to procure more power.Changing sector dynamics of policies and regulations is a positive sign for the sector and thus making India a more competitive one.

-TTC(Total Transfer Capability) is the amount of electricity that can be transferred reliably over a particular transmission system under a given set of operating conditions,considering the possibility of worst contingency.TTC is measured in MW terms and is dependent on network topology,point of injection/withdrawal of the interconnected network.
-TRM(Total Reliability Margin) is the amount of margin kept while determining TTC which ensures that the network will be secure enough to operate in case of critical situation.
-ATC(Available Transfer Capability) is the transfer capability of the system that is available for scgeduling transactions in a specific direction.

Thus, ATC = TTC – TRM
2.To ensure proper usage of TTC,TRM,ATC terminology, a detailed procedure has been prepared w.r.t Open Access in Inter state transmission.
3.Some of inputs that are required to design an efficient Transmission network are network topology,coal- fired thermal dispatch,gas,nuclear and hydro dispatch,MW demand and MVAR demand.
4.TTC between the two points are generally designed bu increasing the load in the importing area and generation in the exporting area till a credible contingency occurs in a single transmission element(n-1)
5. TRM is computed on the basis of 2 per cent of the total anticipated peak demand met in the control area and size of the largest generating unit in the control area.

Procedure for declaration of TTC, TRM and ATC
The above mentioned figures may be revised as and when system conditions change.

Declaration of congestion in Real time
-The figures need to be dosplayed on the websites of RLDC’s based on the inputs provided by the respective SLDC’s.
– A corridor is considered to be “congested” if the grid voltage in the important nodes downstream or upstream of the corridor has breached the operating range as specified in Indian Electricity Grid code.Moreover details regarding the planning of transmission corridor has been published by CEA in its manual
-RLDC an NLDC can issue a congestion notice to the SLDC’s and the same need to be forwarded to all the concerned entities through ususl methods of communication like fax/email/postings on website.
-In case of congestion caused due to forced outages of transmission after fixing the drawal schedule,Open Access transactions should be curtailed as per CERC’s OA regulations followed by revision of TTC,ATC,TRM etc.
-If a violation of TTC limits persists for more than 2 time blocks (Each Time block comprise of 15 minutes) after the issuance of warning notice with no action taken by the defaulting entity,the NLDC/RLDC wil issue a notice for imposing congestion charges.Congestion Charges
The applicable congestion charges as per CERC order are Rs 5.45/unit.Congestion Charge Accounting and Settlement
-Congestion charges account will be settled on a weekly basis.RLDC’s will maintain and operate the bank account quite similar to UI account Any delay in payment beyond 12 days would attract a simple interest of 0.04 %/ day.
-RLDC’s should also submit a monthly statement of accounts to CERC.
Given the grwoing complexity of Indian Power market, CERC need to constantly monitor the procedures and adequate steps should be taken to streamline the Indian Power Sector.

Mundra UMPP was first to commence its operations with commissioning of 3 x 800 MW units in 2012 and last unit was synchronized in Jan 2013 which were quite ahead of their schedule. CGPL (Coastal Gujarat Power Ltd.) -TATA’s wholly owned subsidiary(SPV) has been incurring losses due to change in the regulatory framework in Indonesia’s coal regime(http://news.mitraismining.com/pages/IndonesianMiningRegulation.aspx)
In July 2012,TATA Power sought a tariff hike in lieu of change in coal prices as DISCOMs refused to revise the PPA terms.In its tariff petition of TATA,it has stated that hike in Indonesia coal prices will lead to rise in generation cost by Re 0.67- Re 0.70/Unit,thereby denting the cash flow statements of TATA Power.Inspite of this deadlock of tariff,TATA Power continue its operations of Mundra while R Power stalled work at the Krishnapatnam UMPP.R-Power held that the operations could start only after the revision of Standard Bidding Documents signed with DISCOMs.Delhi High Court has suspended the petition filed by R Power and thus they have plans to approach CERC.

On the other hand,Sasan UMPP has made the steady progress. The first 660 MW unit is expected to commission by 2012-13.In Jan 2013,465 kV switchyard was commissioned in order to provided initial start up power.R Power has plans to commission the remaining units with a time interval of 3-4 months.As far as Coal production is concerned from Moher and Mpher Almohri,its much ahead of the targeted time frame. R Power is also struggling with legal hurdles w.r.t ambiguity of coal usage.Company was asked to stop production in the aforesaid coal blocks in lieu of R Power’s linking the Coal Scam by CAG.

R Power’s third UMPP Tilaiya has faced many delays due to challenges in obtaining forest clearances and land acquisition. As of Nov 2013,Stage II forest clearance has been awarded thereby keeping the project in limbo.

Progress on the bidding process of only 2 UMPPs (Sarguja-CHattisgarh and Bedabahal-Odisha) have stalled as the coal block areas have been classified as No- Go areas. by MoEF. Despite the elimination of problem of Go/No Go areas ,the bad omen of clearances still pending with Sarguja UMPP.Bedabahal UMPP re invited pre qualification bids as it has been awarded green signal as far as MoEF is concerned.
MoP has finalized a new set of SBDs for UMPPs but the approval is still awaited from EGoM.The ministry has proposed separate rounds for Coal linkage and Captive coal blocks. Moreover,the bidding of UMPP will be based on first year tariff rather than 25 year levellised tariff.(http://www.powermin.nic.in/whats_new/pdf/Guideline_for_determination_of_tariff_and_SBD_for_case_1.pdf)
Earlier, in Oct 2012 CERC had suggested revising UMPPs on BOO Model rather than DBFOT Model. Moreover,there was a proposal to supply 100% of the coal to the power plants fulfilling the shortage through coal import.
Thus in the light of various issues,the development if UMPPs have been questioned by power plant developers.There is a need to build flexibility within the PPA structure to deal with uncertainties in a manner that is quantifiable for the prospective investors.